Tag Archives: Financial crash

Operation Break Stuff, by MN Gordon

Is the Federal Reserve going to keep raising interest rates until something—the bond or stock market, bank runs, currency crises—breaks? From MN Gordon at economicprism.com:

Stagflation, sinking labor productivity, severe levels of public and private debt, a splintered real estate market…  You name it.  The economy’s crashing and burning like an old Cutlass Supreme.

There’s nothing the central planners can do to fix it.  No plans or schemes will get the tired jalopy to fire on all cylinders.  A blown head gasket is replaced and the very next day the spark plugs are fried.  Replace those and a piston ring blows.

At some point, it’s beyond salvage.  The only sensible choice left is to scrap the old buggy at the junk yard.

Similarly, scrapping the central planners that are responsible for this economic mess is the right thing to do.  They’ve created a very disagreeable situation.  One that will take several generations – or more – to reconcile.

In this vein, the time has come to purge the rot.  To reckon the mistakes of the past.  To burn off the many distortions that have piled up like dead forest wood.  We’ll have more on this in just a moment.  But first some context is in order.

The past 40 years have been an era of heavy handed central economic planning by way of interventionist monetary policies.  The past 14 years, ever since Ben Shalom Bernanke let the QE genie out of the bottle, has taken this intervention to the extreme.

From the death of Lehman, and through the Great Recession, repo madness, and the coronavirus panic, the Federal Reserve’s created upwards of $8 trillion in credit out of thin air.  The economy and financial markets have come to depend on it.

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Nowhere Left to Hide, by James Howard Kunstler

If you plot chaos against time since the beginning of the Biden administration, it’s going up exponentially and there’s no reason to suspect it won’t keep doing so. From James Howard Kunstler at kunstler.com:

Financial markets are averse to threats of chaos and death. These conditions tend to interfere with formal promises between parties to service loans, which is the basis of finance.

Time, they say, is nature’s way of making sure that everything doesn’t happen at once. If that’s so, then maybe time has stopped because all of a sudden everything seems to be happening at once. Three things, actually: 1) a Russian military operation in Ukraine that a lot of people in America want to turn into World War Three; 2) an epic crack-up of the world financial system; and 3) the breakdown of the fishy Covid-19 affair and especially the story behind its holy avatar: the mRNA vaccine.

In a sane society, that might be enough to trip the institutional reality-test apparatus, but we are not a sane society these days, so we plunge ever-deeper into a hurly-burly of wrongful endeavor vectoring toward self-destruction. The immediate problem is a nation (us) that is powerfully bamboozled, led by a figurehead nobody believes in, backed by a hidden coterie of actors who appear to hate our country enough to try to sink it.

Forgive me for re-stating the premise of the Ukraine situation but one must counter the propaganda emitted like poison gas by a perfidious news media: Russia objected to the expansion of NATO to its very border, based on long-standing prior agreements about it. “Joe Biden” had every chance to formally recognize that reality and stupidly demurred. The Ukrainian government, ditto. Our side (the USA) had already created enough mischief there in mounting the 2014 coup against a government friendly with Russia, and then arming its replacement to harass Ukraine’s own citizens in its easternmost provinces, Donetsk and Luhansk. Two weeks ago, Russia moved in to forcefully correct all that. After all, Ukraine had been a part of Russia since they wrested it from the Ottoman (Turkish) empire in the 1700s, and in any other sense Ukraine is within Russia’s sphere-of-influence, as such things are defined in geopolitical history.

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Blowups and an Epic Mega-Catastrophe are Coming, by MN Gordon

Rising interest rates will spark a catastrophic financial crash. From MN Gordon at economicprism.com:

“Let no man deceive you by any means…” counsels the Good Book (2 Thessalonians 2:3).

As we understand it, Apostle Paul, if that’s in fact the author, was attempting to correct some misinformation floating around Thessalonica in first century Greece.  Someone – perhaps a bureaucrat – was spreading rumors that Christ had already returned.

Paul didn’t buy it.  He clarified that the Anti-Christ would first appear and proclaim himself God.

Did Paul know what he was talking about?  Has the Anti-Christ appeared, yet?

Last year Dr. Anthony Fauci proclaimed himself “the science”.  Thus, he may not have proclaimed himself God.  But he is something gawdawful.

Much like Joe Rogan, and his pains to correct misinformation spread by Fauci, Paul had many enemies and detractors.  Which is fine.

The pursuit of truth is rarely a popular path.  Just ask the ghost of John T. Flynn.  Telling the truth is a most excellent way to make enemies in high places.

Mundus vult decipi, ergo decipiatur – The world wants to be deceived, so let it be deceived.

And why not?

It’s much more agreeable to believe U.S. Treasuries are the safest – default free – investment in the world than certificates of guaranteed confiscation.  It flatters a cabinet member’s ego to believe American exceptionalism is something other than a banana republic with a big military.

These days, individuals like John Locke, who “love truth for truth’s sake,” are far and away in the minority.  But just because the truth’s not popular, doesn’t mean it should be disparaged.

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Alternative Economists Were Right – the Stagflation Crisis Has Arrived, by Brandon Smith

The Fed kicked the can down the road during the last financial crisis, forestalling but not preventing the ultimate crash that’s an inevitable consequence of their policies. From Brandon Smith at theburningplatform.com:

Alternative Economists Were Right, The Stagflation Crisis Is Here

For many years now there has been a contingent of alternative economists working diligently within the liberty movement to combat disinformation being spread by the mainstream media regarding America’s true economic condition. Our efforts have focused primarily on the continued devaluation of the dollar and the forced dependence on globalism that has outsourced and eliminated most U.S. manufacturing.

The problems of devaluation and stagflation have been present since 1916 when the Federal Reserve was officially formed and given power, but the true impetus for a currency collapse and the destruction of American buying power began in 2007-2008 when the Financial Crisis was used as an excuse to allow the Fed to create trillions upon trillions in stimulus dollars for well over a decade.

The mainstream media’s claim has always been that the Fed “saved” the U.S. from imminent collapse and that the central bankers are “heroes.” After all, stock markets have mostly skyrocketed since quantitative easing (QE) was introduced during the credit crash, and stock markets are a measure of economic health, right?

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Life’s a Beach Until the Tsunami Hits: Four Waves Nobody Cares About–Yet, by Charles Hugh Smith

The rug is being pulled from under the financial markets. From Charles Hugh Smith at oftwominds.com:

Four monster waves are about to crash onto the Fed’s beach party and sweep away the unwary revelers.

Hey, is the water in the bay receding? Never mind, free drinks are on the Federal Reserve, so party on, life’s a beach, asset bubbles will never pop, we’re safe. Of course you are. The Fed is all-powerful and would never let a rogue wave turn all its precious phantom wealth into broken detritus.

The water is fast receding and a wave is visible if you care to look, but nobody cares to look. Why bother? The Fed is invincible, that’s all you need to know to mint another fortune.

Just to keep life interesting, let’s look anyway. Gordon Long and I discuss four monster waves that are about to crash onto the Fed’s beach party and sweep away the unwary revelers:

1. Declining liquidity: while everyone is focused on the Fed’s ceaselessly repeated reassurance that the liquidity spigot will never be closed, never ever ever, so party on, asset bubbles will never pop, never ever ever, other central banks have already started reducing global liquidity while domestically, the Treasury General Account (TGA) is soaking up liquidity to fund the federal government’s monumental deficit spending.

2. Declining global growth: long before the pandemic swept ashore in 2020, global growth was faltering: the business cycle had not been abolished, despite Fed assurances that growth and asset bubbles will continue expanding until they reach Alpha Centuri and beyond (Dow one trillion, yowza baby!), growth by any conventional measure (PMI, ISM, industrial production, global trade flows, etc.) had stagnated or rolled over.

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